Early American Government Ran on Lotteries, Not Taxes

When the colonies revolted, lotteries helped the new nation survive.

The corrupt Louisiana State Lottery company, which issued this 1889 ticket (shown front and back), gave lotteries a bad name.

PUBLIC DOMAIN

In the late 19th century, Ainsworth Rand Spofford, the sixth Librarian of Congress, went looking through America’s early newspapers for the earliest notice of a lottery he could find. What he found had been published in February 1720, in the American Weekly Mercury. This lottery was not the colonies’ first, Spofford cautions – only the first for which he could find a printed notice. The ad promised 350 tickets would be sold, for 20 shillings a piece.

The prize? “A new brick house, corner of Third and Arch,” in Philadelphia.

Lottery-Funded Public Goods

As Philadelphia came to surpass Boston as the colonies’ largest city, its growth was funded in no small part by lotteries.

“It was looked upon as a kind of voluntary tax for paving streets, erecting wharves, buildings, etc., with a contingent profitable return for such subscribers as held the lucky numbers,” wrote Spofford in 1893.

Philadelphians used lotteries to build a battery on the Delaware River to defend the city, span creeks with bridges, and fund roads that led from the countryside into the city. But it was far from the only city in the American colonies that depended on people’s willingness to try their luck. In the 17th and 18th centuries, lotteries were a thriving business, both public and private, and without them, early America couldn’t have been built.

A ticket for a lottery in Massachusetts, 1758. RON SHELLEY/PUBLIC DOMAIN

The tradition of lotteries came to America from Europe, where they first started gaining traction in the 16th century. According to one scholar, the first lottery used to raise government revenue and offer a cash prize was held in Florence, Italy, in 1530. Soon France picked up on this innovative means of raising money, and the British crown adopted the lottery in 1569.

By the 1700s, lotteries were a popular way to raise money for all sorts of projects and were seen less as a sinful pastime than a civic duty. In the early 18th century, The Independent reports, the Archbishop of Canterbury lent his good name to lotteries funding the British Museum and Westminster Bridge.

Lotteries for Survival

From the earliest days of colonial history in America, lotteries were essential to the project’s survival. In the summer of 1612, the Virginia Company held a lottery to raise additional funding for the struggling settlement at Jamestown. (A tailor named Thomas Sharplisse won the largest prize – 4,000 crowns, a small fortune.)

Three years later, the company tried the same gambit, with a focus on the greater good that would come from white people colonizing the New World. “As pitched by the Virginia Company, buying a lottery ticket was an act of charity that could save a savage’s soul,” Matthew Sweeney writes in The Lottery Wars.

The Continental Congress used lotteries to raise money, 1776. RON SHELLEY/PUBLIC DOMAIN

Lotteries didn’t just save the Virginia Company’s settlers from starvation, though. When the colonies revolted against the crown, lotteries helped the new United States of America survive. In 1776, the Constitutional Congress held one to benefit the soldiers of the Revolution. (Since the value of the new country’s currency was fluctuating wildly, it was less successful than hoped.)

Once the colonies won the war, the new states leaned heavily on lotteries to raise revenue, in part because they were not eager to tax newly independent citizens who’d just rebelled against taxation by a central authority. Lotteries funded the growth of the country’s earliest colleges, including the College of New Jersey (later Princeton), Dickinson College, Harvard, and Yale, of many, many churches, and of iconic buildings, including Boston’s Faneuil Hall, which needed to be rebuilt after it burned down in 1761.

A Massachusetts lottery ticket, 1744. GOVERNMENT OF MASSACHUSETTS/PUBLIC DOMAIN

A Reputation for Corruption

But in the 19th century, the popularity of lotteries waned as they were haunted by corruption. It was easy enough to announce a lottery, sell tickets, and abscond with the money without offering a prize.

In New York and Massachusetts, lotteries were banned in the 1830s, and later in the century most states followed suit. Government lotteries wouldn’t become popular again until the second half of the 20th century, when states started using them once again – to raise revenue without raising taxes.

Reprinted from Atlas Obscura.

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